Iraq Energy Outlook 2019

World Energy Outlook special report

Despite the extraordinary challenges of war in recent years, Iraq has made impressive gains, nearly doubling the country’s oil production over the past decade. But the turmoil has also undermined the country’s ability to maintain and invest in its power infrastructure. This report maps out immediate practical actions and medium-term measures to tackle the most pressing problems in Iraq’s electricity sector. It also takes a detailed look at the country’s oil and gas sector, projecting that Iraq’s oil production will grow by 1.3 million barrels a day by 2030, becoming the world’s fourth-largest oil producer behind the United States, Saudi Arabia and Russia.

Key findings

The increase in Iraqi oil production capacity over the last decade has been impressive, yet there are a number of challenges facing the sector going forward.

One impeding barrier is the availability of water, as planned oil production will require a level of water production above what has been achieved so far. Assuming an increase in water availability, Iraq’s production to 2030 grows by around 1.3 mb/d, making it the third largest contributor to global oil supply in that time.

Top 5 contributors to global oil growth, 2018-30

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As oil production has soared, so has the amount of associated gas produced alongside. However the capacity to capture and process this gas has not kept pace. The inability to utilise its gas riches means that the country's gas deficit has grown, and Iraq now relies on imports from Iran to meet increasing demand.

This has introduced a number of vulnerabilities to Iraq’s energy system. For example, payment issues last summer led to Iran cutting exports, significantly exacerbating electricity shortages in Iraq during peak seasonal demand.

Natural gas production and flaring in Iraq, 2000-2030

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Power outages in Iraq remain a daily occurrence for most households, as increasing generating capacity has been outrun by the increasing demand for electricity, spurred by greater cooling needs in the peak summer months. Over the past five years, the size of the gap between peak electricity demand and maximum grid supply of power has expanded, despite available supply increasing by one-third.

Peak demand and maximum power supply from the grid in Iraq, 2014-18

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Alleviating the power shortages at the height of summer remains one of the most important priorities of the Iraqi government. Here, there is room for cautious optimism, as a number of options are available to help remedy the immediate shortfalls.

For example, consumers should be encouraged to shift non-essential demand away from peak hours, enabling more households to have cooling during the hottest parts of the day.

Improving networks could also provide immediate gains. This would involve identifying the weakest parts of the grid, and concentrating efforts on improving the state of the distribution network. The losses in the Iraqi system are around 40 TWh, four times the total neighbourhood generation in Iraq – addressing this could boost supply quickly.

There are also options with increase available capacity by increasing the number of small generators and larger mobile generators (both oil-based) that can be put in place quickly and can help alleviate the most intense shorages.

Technology options to improve electricity supply by development time in Iraq, 2019

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There are a number of pathways available for the future of electricity supply in Iraq but the most affordable, reliable and sustainable path requires cutting network losses by half at least, strengthening regional interconnections, putting captured gas to use in efficient power plants, and increasing the share of renewables in the mix. In the long term, all options are available to improve the situation in the power sector.

Where measures are taken to both curb demand and increase available capacity, Iraq could establish a capacity margin by 2030 (where available capacity exceeds peak demand). At that point, grid supply would be available to most consumers 24 hours per day.

Iraq's electricity supply and demand, 2018-2030

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